An under-appreciated part of today’s oil supply dynamics is increased incentives for investments in Enhanced Oil Recovery techniques, as I discussed as part of a recent post predicting that oil prices may trade in a range of $80 - $100 for some time.  Posted below is a report detailing how new technologies are being applied to U.S. “stripper” wells, of which an estimated 400,000 produce nearly 1 mb/d.   Small improvements in effectiveness and cost reduction are being implemented in this business because of new high oil prices and those small steps, multiplied by so many wells, could result in significant amounts of new oil coming to market. 

As noted in the earlier post, the impacts are two-fold.  They tend to produce more oil in the short term than other wise would be the case.  On the other hand, as the Mexicans have found out with Cantarell, over a longer time frame such EOR efforts result in very rapid decline rates once the fields do go into decline.   In other words, they borrow oil from the future to use in the present and so reduce current deficits but increase future ones.  How far into the future?   Is it three years? Five years?  Whatever the number, it is probably not more than 10 years before today’s EOR become tomorrow’s rapid decline rates.

The prediction of $80 - $100 oil was made on proviso that the Nigerian conflict does not result in significantly more Nigerian production being taken off the market.  The most recent report on that situation does in fact indicate continued additions to the quantity of Nigerian oil being shut in by conflict - the number now being put at 280 kb/d.   That amount of oil and the rising trend in the amount being taken off the market suggest a major reason oil did exceed $100 per barrel for a short time today and may go on to exceed that price.

Stripper wells try to get more oil from ground

By Abbie Boudreau and Jessi Joseph
CNN Special Investigations Unit

(CNN) — The political discussion about solving America’s energy crisis is focused on offshore drilling and renewable energy, but scattered throughout the country are thousands of small oil wells called stripper wells.

CNN’s Abbie Boudreau examines a stripper well in Bradford, Pennsylvania.

Many of them are family owned and these small, independent operators say they could also be part of the energy solution. Forgotten about and misunderstood, many small operators say most people don’t even know they exist.

“That’s part of our message — to let the public realize we are not the Exxons and the Mobils,” said Fred Fesenmyer of Minard Run Oil, a Bradford, Pennsylvania, company that has been in his family for six generations. “I think we’re a huge part of the solution.”

Stripper wells are marginal, low-volume wells that produce less than 10 barrels of oil per day. Individual wells can be active for decades, slowly pulling (or stripping) more oil and gas out of the ground. While 10 barrels a day produced by an individual well may not seem like much, when multiplied by the more than 400,000 wells in the United States, they do make a significant contribution. In 2006, the industry supplied 17.8 percent of America’s domestic production and Fesenmyer says they could produce even more. Watch how stripper wells could provide more oil »

“We still feel that there’s about 50 percent of the oil still left in place. You’re not going to recover every drop of it, but technology will help us recover a lot more,” Fesenmyer said.

“It’s like squeezing a sponge. You can squeeze it by hand, but if you put it in a wringer, you’re going to get some more out of it. So, what we’re trying to do is come up with new technology that will allow us to extract more oil from the same area that we’re extracting it now.”

The Stripper Well Consortium provides funding for the development of new technologies to help stripper well producers operate more efficiently and extend the life of old wells.

Stripper wells produce about 335 million barrels of oil each year, according to the consortium. The group says that if each stripper well could produce one more barrel of oil per well per month, that would be equal to two super-tankers of oil imports each year.

“If we have 50 to 60 percent of the oil still left in the ground, why can’t we develop better technologies to get that out?” said Joel Morrison, director of the consortium.

One project currently being tested is the GOAL Petro Pump. The manufacturers of the pump, Brandywine Energy and Development Company, say some of their clients have seen a 100 to 300 hundred percent increase in production since its installation.

The new technology uses the natural pressure of the well to extract more oil and gas and uses no electricity. The manufacturers say the pump can operate on as little as 12 to 15 pounds of differential pressure, which allows it work on very old wells. Other technologies currently being developed are aimed at increasing production by decreasing maintenance and operational costs.

For now, Morrison says too much oil in these old fields just sits in the ground, untapped.

“Wouldn’t it be great if we could take a well that’s producing two barrels a day and make it up to five barrels a day?” he said. “We don’t even have to drill for more. Let’s just use technology to get more of that oil out of the ground. It’s an existing well. The footprint is already there.”

Morrison said stripper wells could be part of our energy solution, but there is no “silver bullet” answer.

“There is no magic solution for the U.S. to get out of the short-term energy problem,” he said. “I’m convinced that given enough time, we are innovative, we will come up with solutions to our energy problems, but for now we talk about a bridge to the future. Stripper wells are part of that bridge.”

Tags: peak oil energy investments

This entry was posted on Thursday, September 18th, 2008 at 7:16 pm and is filed under Megaprojects, United States, oil supply. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.